Chapter 8

Question 1

The entry to record a purchase of merchandise on credit includes?

Answer 1

A Debit to Purchases and a Credit to Accounts Payable.

Question 2

The Purchases account is a?

Answer 2

Temporary Account.

Question 3

If Gordon Company purchases merchandise on account and the invoice includes freight and the price of goods, the journal entry to record this will affect how many accounts?

Answer 3

Three.

Question 4

Credit terms of 1/10, n/30 mean that?

Answer 4

If the invoice is paid within 10 days of its date, a 1% discount may be taken; otherwise the total amount is due in 30 Days.

Question 5

The net delivered cost for purchases is calculated as follows:

Answer 5

Purchases + Freight In - Purchases Returns and Allowances - Purchases Discounts.

Question 6

Detailed information about the individual accounts for all creditors is provided by?

Answer 6

An Accounts Payable Ledger.

Question 7

A balance with parentheses ( ) around the amount indicates?

Answer 7

A non-normal or negative balance.

Question 8

The schedule of accounts payable is prepared from the?

Answer 8

Accounts Payable subsidiary ledger.

Question 9

Which of the following is an objective of internal control of purchases?

Answer 9

To create written proof that the purchases and payments are authorized.